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Late Payments

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Perhaps you’re having problems with cash flow right now, or perhaps you simply forgot to pay. No matter what the reason, late payments always raise a red flag. Just because your credit card issuer hasn’t called demanding payment doesn’t mean they’re not taking action.

What happens when you make late payments?

1. You get charged a “late payment fee.”

Expect your next bill to include a fee for your missed payment. These fees can add up to thousands of pesos depending on the amount you owe, so be very careful.

2. They may raise your interest rate.

The credit card issuing bank doesn’t just stop at penalizing you with additional charges. They may also increase your interest rate to what they call the “default rate,” which is legally the highest interest rate that a creditor can charge. This  makes it even harder for you to carry a balance. However, if you are disciplined and make payments on time in the next six months or so, you may be given back your pre-penalty rate.

3. Your credit score may drop.

If you fail to make payments for more than 30 days, the bank may send your details to the credit bureau. Remember that your payment history constitutes about 35% of your total credit score, so making late payments significantly affects your standing and your ability to secure new credit cards or credit lines in the future.

As a general rule, short-term failure to make payments (less than 60 days) won’t be too catastrophic for your credit score. However, if you still don’t pay for three months (90 days), you can expect your credit score to plummet.

How to avoid late payments

The best thing to do to prevent your credit score from being affected by missed payment is to make payments on time, of course. If you tend to forget paying, try to arrange an automatic payment system online. This is easy if your credit card issuing bank and your savings / payroll bank is one and the same. You can also remind yourself to pay simply by putting a repeating alarm on your mobile phone several days before the monthly deadline.



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Find out your basic goals. Ask yourself; Why do I need a credit card? You can’t just go and apply for a credit card just to be “in” with another crowd.

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